29TH OCTOBER CURRENT AFFAIRS

1. New Land laws for J&K

News: The Centre has notified new land laws for the Jammu and Kashmir UT region, ending the exclusive rights enjoyed by the local population over land under the now-diluted Article 370.

Background:

  • The Centre has been arguing that Article 370 hampered development in the U.T. as investors were unable to purchase land prior to August 5, 2019. People, including investors, outside Jammu and Kashmir can now purchase land in the Union Territory.

Introduction of changes:

  • The introduction of the UT of J&K Reorganisation (Adaptation of Central Laws) Third Order, 2020,by the Ministry of Home Affairs has resulted in the repeal of at least 11 land laws in vogue in J&K earlier, including the J&K Big Landed Estates Abolition Act that had resulted in the famous land to tiller’ rights.

Reforms introduced:

  • Under the newly introduced J&K Development Act, the term “permanent resident of the State” as a criterion has been “omitted”, paving the way for investors outside J&K to invest in the UT.
  • Under the ‘transfer of land for the purpose of promotion of healthcare or education’, the government may now allow the transfer of land.
  • According to amendments made to “The Jammu & Kashmir Land Revenue Act, Samvat, 1996”, only agriculturists of J&K can purchase agricultural land.
  • No sale, gift, exchange, or mortgage of the land shall be valid in favour of a person who is not an agriculturist.
  • No land used for agriculture purposes shall be used for any non-agricultural purposes except with the permission of the district collector.
  • Under a new provision, an Army officer not below the rank of Corps Commander can declare an area as “Strategic Area” within a local area, only for direct operational and training requirements.
  • Note: These laws do not apply to the UT of Ladakh. The Centre is likely to notify separate land laws for the UT of Ladakh soon.

2. Unlawful Activities (Prevention) Act

News: Eighteen more individuals declared as terrorists under the Unlawful Activities (Prevention) Act, 1967. Please note, the Central Government had amended the Unlawful Activities (Prevention) Act, 1967 in August 2019, to include the provision of designating an individual as a terrorist. Prior to this amendment, only organizations could be designated as terrorist organizations.

About UAPA

  • The UAPA is aimed at effective prevention of unlawful activities associations in India. Its main objective was to make powers available for dealing with activities directed against the integrity and sovereignty of India
  • It is an upgrade on the Terrorist and Disruptive Activities (Prevention) Act TADA, which was allowed to lapse in 1995 and the Prevention of Terrorism Act (POTA) was repealed in 2004. It was originally passed in 1967 under the then Congress government led by former Prime Minister Indira Gandhi.
  • Till 2004, “unlawful” activities referred to actions related to secession and cession of territory. Following the 2004 amendment, “terrorist act” was added to the list of offences.

Recent amendments

  • The Centre had amended UAPA, 1967, in August 2019 to include the provision of designating an individual as a terrorist.
  • The Act empowers the Director General of National Investigation Agency (NIA) to grant approval of seizure or attachment of property when the case is investigated by the said agency.
  • The Act empowers the officers of the NIA, of the rank of Inspector or above, to investigate cases of terrorism in addition to those conducted by the DSP or ACP or above rank officer in the state.

3. India-Myanmar relations

News: The Foreign Secretary and Chief of the Army Staff have recently visited Myanmar reflected India’s multidimensional interests in the country.

India-Myanmar relations

  • There are two lines of thinking that drive India’s Myanmar policy: engagement with key political actors and balancing neighbours.
  • For Myanmar, the visit would be viewed as India’s support for its efforts in strengthening democratization amidst criticisms by rights groups over the credibility of its upcoming election.

Policy of non-interference

  • The political logic that has shaped India’s Myanmar policy since the 1990s has been to support democratization driven from within the country.
  • This has allowed Delhi to engage with the military that played a key role in Myanmar’s political transition and is still an important political actor. A key factor behind the military regime’s decision to open the country when it initiated reforms was, in part, to reduce dependence on China.
  • By engaging Myanmar, Delhi provides alternative options to Naypyidaw. This driver in India’s Myanmar policy has perhaps gained greater salience in the rapidly changing regional geopolitics.

Recent developments

  • Like in other neighbouring countries, India suffers from an image of being unable to get its act together in making its presence felt on the ground. The inauguration of the liaison office of the Embassy of India in Naypyidaw (the capital) may seem a routine diplomatic activity.
  • However, establishing a permanent presence in the capital where only a few countries have set up such offices does matter.
  • Interestingly, China was the first country to establish a liaison office in Naypyidaw in 2017. India has also proposed to build a petroleum refinery in Myanmar that would involve an investment of $6 billion.

Significance of Myanmar for India

  • This is an indication of Myanmar’s growing significance in India’s strategic calculus. It also shows India’s evolving competitive dynamic with China in the sector at a time when tensions between the two have intensified. Another area of cooperation that has expanded involves the border areas.
  • Furthermore, the recent announcement that India was transferring a Kilo-class submarine to Myanmar demonstrates the depth of their cooperation in the maritime domain.

Approach towards Myanmar

  • For Delhi, the balancing act between Bangladesh and Myanmar remains one of the keys to its overall approach to the Rohingya issue. Delhi has reiterated its support for “ensuring the safe, sustainable and speedy return of displaced persons” to Myanmar.
  • By positioning as playing an active role in facilitating the return of Rohingya refugees, India has made it clear that it supports Myanmar’s efforts and also understands Bangladesh’s burden.
  • For Delhi, engaging rather than criticizing is the most practical approach to finding a solution.

Conclusion

  • For India, Myanmar is key in linking South Asia to Southeast Asia and the eastern periphery becomes the focal point for New Delhi’s regional outreach.
  • Delhi’s political engagement and diplomatic balancing seem to have worked so far in its ties with Myanmar.
  • Whether it has leveraged these advantages on the ground to the full is open to debate.
  • The aforementioned initiatives could be the beginning of change on the ground by establishing India’s presence in sectors where it ought to be more pronounced.

4. Financial picture of DisComs

Role of the DisComs

  • Distribution Companies (DisComs) are the utilities that typically buy power from generators and retail these to consumers. For all of India’s global leadership for growth of renewable energy, or ambitions of smart energy, the buck stops with the DisComs.
  • The days of scarcity of power are over. The physical supply situation has mostly improved. But the financial picture has not brightened much.

Liabilities of the DisComs

  • ₹90,000 crore(later upgraded to ₹1,25,000 crore) was earmarked for DisComs in ₹20-lakh crore package announced in the wake of Covid-19’s economic shock.
  • The Power Finance Corporation (PFC)’s Report on Utility Workings for 2018-19 showed dues to generators were ₹2,27,000 crore, and this is well before COVID-19. It also showed similar Other Current Liabilities.
  • DisComs have delayed their payments upstream (not just to generators but others as well) — in essence, treating payables like an informal loan.
  • Ideally, DisComs should not incur losses as they enjoy a regulated rate of return. While AT&C losses can explain part of any gap. Major reasons are as discussed below:
  1. Regulatory issues
  • The first problem starts at the regulatory level where even if DisComs performed as targeted, across India, they would face a considerable cash flow gap. This cash flow gap was ₹60,000-plus crore in FY18-19 compared to their then annual cost structure of ₹7.23-lakh crore.
  1. Issues of dues
  • These dues are of three types.
  1. First, regulators themselves have failed to fix cost-reflective tariffs thus creating Regulatory Assets, which are to be recovered through future tariff hikes.
  2. Second, about a seventh of DisCom cost structures is meant to be covered through explicit subsidies by State governments.
  3. Third, consumers owed DisComs over ₹1.8 lakh crore in FY 2018-19, booked as trade receivables.
  • State governments are the biggest defaulters, responsible for an estimated a third of trade receivables, besides not paying subsidies in full or on time.
  1. Renewable Energy
  • The rise of renewable energy means that premium customers will leave the system partly first by reducing their daytime usage. And as battery technologies mature, their dependence on DisComs may wane entirely.
  • Even without batteries, regulations permitting, they may want to find third party suppliers under competitive models.
  1. COVID-19 Pandemic
  • COVID-19 has completely shattered incoming cash flows to utilities. The revenue implications were far worse since the lockdown disproportionately impacted revenues from so-termed paying customers, commercial and industrial segments.
  • Reduced demand for electricity did not save as much because a large fraction of DisCom cost structures are locked in through Power Purchase Agreements (PPAs)that obligate capital cost payments, leaving only fuel savings with lower offtake.

Way forward

  • We will probably need a much larger liquidity infusion than has been announced thus far, but it also must go hand-in-hand with credible plans to pay down growing debt. We need a complete overhaul of the regulation of electricity companies and their deliverables.
  • We need to apply common sense metrics of lifeline electricity supply instead of the political doleout of free electricity even for those who may not deserve such support. For the rest, regulators must allow cost-covering tariffs.